Restaurant marketing is both an art and a science that is shrouded in mystery for far too many restaurant owners. Unfortunately, many advertising sales people don’t want you to know what’s really working. They want you to think that the television spots your competitor is running with them will be the answer to all of yours sales-building challenges. Not so. This brief report seeks to outline some of the restaurant marketing tactics and principles that are working in successful restaurants around the country.
Let’s get started with some of the most frequently asked questions from restaurant owners when seeking a better way to market their restaurants:
What are the keys to great restaurant marketing?
There are several components of successful restaurant marketing. This isn’t an all inclusive list, but some top strategic restaurant marketing issues include:
Restaurant Marketing: Branding
There has been lots of hype over the last few years about branding. We’re all being told we need to do more branding and a better job at branding, but no one has really stopped to explain what a brand is and how you build it. A brand is a promise. It’s what customers, employees (Internal Customers), vendors, the media and all other key constituents come to expect in dealing with your restaurant. Brand-building is closing the gap between what you promise and what you deliver. A strong brand is one that has alignment between the promise and execution. It’s not something that happens when you advertise, and it’s not that people recognize your logo or recall your advertising.
Restaurant Marketing: Positioning
Positioning is an underleveraged restaurant marketing component. Positioning is the place you hold in the customers’ or prospects’ mind relative to the competition (the cheaper choice, the higher quality choice, et cetera). Effective positioning involves incorporation of your Unique Selling Proposition (U.S.P.). The U.S.P. is the one thing that only you can claim. It’s a point of differentiation that the competition either cannot or does not claim. An example is Burger King versus McDonald’s. If Burger King can convince you that a flame-broiled burger tastes better than a fried burger, they’ve won the war because McDonald’s will never go into all 14,000 stores and rip out fryers to install char-grilling pits.
Restaurant Marketing: Due Diligence
Restaurant marketing doesn’t happen in a vacuum. Effective restaurant marketing must be built on a foundation of fact and knowledge about the market, your competition, your customers, your Internal Customers, financial history, marketing history, the industry, and outside forces that will impact your business. It’s a lot to worry about, but restaurant marketing has to factor these considerations into the overall strategy. Not even Coca-Cola can afford to market to everyone all the time, so effective market research and due diligence can help you be more effective in your restaurant marketing efforts.
Restaurant Marketing: Menu Mix
Every six to twelve months, you’ll want to conduct an analysis of your menu. This will include profitability analysis and a competitive restaurant menu analysis. To keep your menu fresh, relevant, and profitable, you’ll need to know specifically how each item on your menu is performing and also how it stacks up next to your top competition. Think of each item on your menu as a tenant leasing space and it has to earn its right to the space you’ve granted it.
Restaurant Marketing: Training
Restaurant marketing, human resources, operations and training are inextricably connected. You’ve heard before that great restaurant marketing will just kill a bad operation faster. That’s because if you send people into an operation that is performing at a B- level or below, people will have a bad experience, and your money would be better spent on operations improvement rather than restaurant marketing. Training is a vital component of restaurant marketing for this reason. Your training will have to go beyond just employee orientation. You’ll need an ongoing program that constantly improves and evolves your staff competencies. It’s also a good idea to include a restaurant marketing component in your training program so that you have a staff of ambassadors to help your sales-building efforts.
There are only 4 ways to increase sales for your restaurant
Sales-building is so much easier when you know how it works. And fortunately, the methodology is much easier with the following definitions. Every effort you could make to build sales falls into one of just four categories. Every promotion, advertisement or offer will push one of the following four buttons:
Restaurant Marketing: New Trial
These are customers buying from you for the first time. They will establish their opinion of your company during this first purchase and decide what percentage mindshare to award you in the future. New trial is the most expensive of the four sales-builders as acquisition costs are typically 7-10 times more costly to execute than the other sales builders. However, it is impossible to increase frequency, check average or party size without customers to start with. After a customer base has been established, however, it is advisable to focus considerable efforts on the sales-builders listed below.
Restaurant Marketing: Frequency
This is how often existing customers return to you for future purchases. Frequency is generated by developing enduring relationships and loyalty among customers. While it is rare to disagree that frequency is important, an alarming number of businesses fail to appropriate the needed mindshare and resources to developing successful programs. Consider that the average Pizza Hut loyalist purchases a pizza every 30 days. If Pizza Hut can get this group to purchase just one more pizza in those 30 days, they’d double their sales. So why do they blast the airwaves versus developing more successful frequency programs, such as bouncebacks, loyalty programs and the like? You’ve got me.
Restaurant Marketing: Check Average
Check average often refers to the total purchase for each transaction. In this instance, however, we are referring primarily to per person check average – the amount each guest or customer spends at purchase. Check averages can be built through price increases, suggestive selling programs, effective internal merchandizing, and through add-ons or upgrades to name but a few techniques. You’ll want to make sure that the increase in check average remains consistent with your overall positioning strategy.
Restaurant Marketing: Party Size
As the name would suggest, party size refers to the number of people in each party. Do customers primarily visit alone, in groups of 2, groups of 5 or more? Whatever the number, you’ll want to devise programs that encourage customers to bring more of their friends with them for each visit. Examples of programs include bus drivers eat free, birthday clubs and refer-a-friend tactics. Encouraging party size turns customers into advocates and enlists them as part of your sales-building team.
When asked what was the single most important event in helping him arrive at the theory of relativity, Albert Einstein was reported to have said, “Figuring out how to think about the problem.” Use the above definitions to help you better frame the challenge of growing your sales.
How much should we spend on restaurant marketing?
There are several rules of thumb and ratios in the restaurant industry and there are some for restaurant marketing as well. A typical restaurant should allocate 3% – 6% of sales to restaurant marketing. It’s also a good idea to allocate this money proportionally to your sales volume. Meaning, if July is your busiest month, you should spend a proportionate amount on your restaurants marketing budget in that month. Fish where the fish are biting. Some restaurant owners look at slow periods and think that’s when they need to spend money to drive sales, so they spend a big chunk of cash trying to build a happy hour business and forgo building on top of their busy periods. Fact is, there is a reason people aren’t coming in from 4 p.m. to 6 p.m. and you’ll be sending valuable marketing dollars down a black hole if you try to build this period. There are nearly one million restaurants in theUnited States and probably only 2% of them are busy from 4 p.m. to 6 p.m. Restaurant marketing can’t change behavior; it can only influence existing behaviors. Spend your restaurant marketing dollar where it will have the best return for your restaurant.
How do most restaurants market themselves?
It’s sad really, but 80% – 90% of restaurant marketing budgets are spent against new trial getting a new customer to visit for the first time. This is the least effective place to spend your money. The majority of new trial efforts are spent against mass media advertising, which is costly and has dismal return on investment. The fact is, new customer acquisition is 7-10 times more expensive than building restaurant sales through increased frequency, check average and party size. But restaurant marketing isn’t always about what’s most effective. More often it’s about what everyone else is doing. Restaurant operators see that their competitor is on television or in the Yellow Pages or on a billboard and think that they should be too. They do this without regard for what’s working. Restaurant owners have to wear so many hats that sometimes they just do what’s easiest – they write a check for mass media advertising and hope for the best. Mass media is often more about feeding ego than driving sales. It’s also impossible for most companies to compete in a toe-to-toe battle with the big guys. Subway spends $290 million per year on television. They can do that because they are a multi-billion dollar enterprise, a title less than 100 restaurant corporations in the world can claim. The question you’ll have to ask yourself is Do we want to jump off the bridge just because so many other people are jumping?
Who is doing a great job of restaurant marketing and what works about their restaurant marketing efforts?
There are several examples of companies large and small that are doing a great job of restaurant marketing. I’ll give you some examples of each. On the larger side, Starbucks is doing an awesome job. They spend more money on training than they do on advertising. They do a great job with their internal merchandizing and their menu is very focused. They don’t spend money on mass media and instead focus on a core product line and flawless execution. They are now the fastest growing takeout operation in history.
A great example of a regional chain that’s doing an impressive job with restaurant marketing is Firehouse Subs. They have strong internal merchandizing, training and culture programs. They also have a very impressive direct mail program. They send out quarterly saturation mailers offering a free sandwich with no strings attached. The mailers draw double-digit responses and drive equally impressive comparable store sales improvements. Research showed that 70% of the people who redeemed the cards became loyal customers visiting with a much higher frequency than the industry average.
Examples of successful independent restaurant marketing abound. Charlie Trotter’s, which voluntarily closed in 2012, was world-renowned, but you probably never saw a billboard or television spot for them. Charlie Trotter’s did an incredible job with promotion and positioning the namesake chef as a culinary expert. When you visitChicago, you wanted to go to his restaurant just for that reason, not because of any advertising he had done.
What are some examples of good restaurant marketing tactics?
There are no silver bullets when it comes to restaurant marketing. Some good examples of successful restaurant marketing tactics are email marketing, bounce-backs, affinity marketing programs, publicity through event marketing, partnerships with other local retailers and, of course, internal merchandizing, such as bathroom signage and menu merchandizing.
How do I measure the effectiveness of our restaurant marketing?
If you cannot prove the dollars you spend persuade people to do business with you, you should not advertise. If you can’t see a direct relationship between restaurant marketing and increased sales, your marketing isn’t working.
One piece of analysis we have conducted for clients is to compare the variances, period over period, for sales and restaurant marketing expenses. We look to determine a correlation. It’s amazing how frequently we find that there is absolutely no correlation between sales and restaurant marketing. The graph here is an actual client chart that shows this relationship. This was an independent restaurant operation that had a steady period-over-period sales increase of around 8%. The other line represents their advertising expenditures. As you can see, there is absolutely no correlation between the two lines. For this independent operator, that represented about $150,000 in advertising dollars that could have gone straight to the owner’s back pocket instead. This restaurant owner had solid operations, and he wouldn’t have felt any change in his sales volume for at least a couple of years by canceling his advertising. The restaurant advertising wasn’t working. After some modifications, we ran the analysis again and found that each dollar spent had a direct impact on sales and showed a positive return on investment that could be measured. Before, the measurement wasn’t there, so it was hard to say with absolute certainty if the advertising was working. The poor marketing was masked by the increases in sales, but one had nothing to do with the other.
What is Local Store Marketing and Neighborhood Marketing and does it work for restaurants?
Local Store Marketing and Neighborhood Marketing are basically the same thing. It’s a marketing philosophy that seeks to build competitor-proof relationships with customers and employees without a reliance on mass media advertising. It’s about all of the elements we’ve discussed so far in this special report plus a whole lot more. Simple fact is, unless you are one of those 100 restaurant companies that’s doing hundreds of millions of dollars in sales per year, you can’t afford not to focus on Local Store Marketing over advertising. Don’t fall into the trap of jumping off a bridge (and advertising) just because everyone else is. The competitive advantage is found in the fact that many of your competitors are not running effective Local Store Marketing for their restaurants. Local Store Marketing and Neighborhood Marketing are potent tools in a variety of retail business arenas, and the restaurant business is definitely an environment for which it’s well suited.
The fact that restaurant marketing is not easy is part of its competitive advantage
Effective restaurant marketing isn’t easy. It takes a lot of careful research, analysis and testing. It’s also ever evolving, which makes it even more difficult to master. The most difficult part is that restaurant owners are in the restaurant business, not professional marketers. But don’t be discouraged. It’s not all gloom. The fact that effective restaurant marketing is difficult to master is what can give you the competitive advantage. Resist the temptation to change everything at once or to go it all alone. You can start small and build your marketing competencies over time. In the beginning, do simple programs so you can execute them well and measure the results. And if you’re not sure if your current marketing is working, save your money until you can prove the dollars invested persuade customers to buy more and buy more often.